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OPINION

Rally needs a small breather

Rally needs a small breather
January 7, 2013
Rally needs a small breather

The S&P is not far off its bull-market highs at 1475. Approaching such levels, it is only natural for a bit of nervousness to creep in. However, I would be very surprised if a major top occurred here. Neither breadth nor momentum is currently suggestive of a market that is peaking out. A bit more of a sell-off in all three main Wall Street indices would be helpful now, though, in order to set up a really determined charge. I am still seeking long positions at the end of any small dip.

for analysis of some leading equity indices.

COMMODITIES OUTLOOK

09.56

The US is about to embark upon fiscal tightening and rightly so. The world’s largest economy has taken longer to address its budgetary imbalance than other highly-indebted nations, such as the UK. In order to alleviate the inevitable pain of higher taxes and lower spending, America will need to engage in further quantitative easing and perhaps other aggressive monetary policies too. As a result, I believe the Fed’s chatter about ending QE is wide of the mark, and that the dollar’s present revival will prove temporary.

I am looking for potential longs in Brent and copper, and shorts in gold and silver.

Click here for analysis of some leading commodities and EURUSD.

EUROPEAN OUTLOOK

07.21

The rally in European equities is in good shape. The DAX and FTSE have both got off to a flyer in 2013. And I believe that both have the potential to continue this run. Unlike the US indices, I believe that the German and UK markets are genuinely cheap. As such, they are especially well placed to benefit from global economic recovery and from ongoing cheap money from the ECB and elsewhere.

On a very near-term view, the FTSE is both overbought on its daily and intraday charts, and this needs to resolve itself in order for the upside to continue. Any correction now does not need to be too dramatic. In fact, it may well be a mild one, as so often occurs when a market is in a strong uptrend.

for analysis of some leading equity indices.